North and South Korea Building Business

South Korea plans to revise a law to foster inter-Korean exchanges and support companies doing business with the North, the unification ministry said Tuesday.

The law revision would oblige the government to put any restrictions and bans on economic projects with North Korea to a Cabinet review and provide support to help normalize the operations of companies should they suffer losses caused by the suspension of inter-Korean businesses.

The amendment proposal will be open for public review from Monday until late August before going into effect, the ministry said.

The move came amid a growing need for protecting companies from risks stemming from doing business with North Korea.

The need has been, in particular, raised since the then conservative Seoul government decided in 2016 to abruptly halt the operation of a joint industrial complex in the North’s border town of Kaesong in retaliation for Pyongyang’s missile and nuclear provocations, causing losses to South Korean companies operating there.

The industrial park is regarded as a major inter-Korean cooperative project, along with a tour program at Mount Kumgang on the North’s east coast, which was also suspended in July 2008 after a female South Korean tourist was shot dead by a North Korean guard near the resort.

“There has been a lot of demand for putting in place a process that will ensure careful deliberation before making such decisions as suspending the Kumgang tour program or the Kaesong industrial park,” a ministry official said on condition of anonymity. “We reflected the demand (in the revision).”

As the relations between the two Koreas have been warming since the start of this year, expectations over the resumption of such long-halted contacts are increasing, with some raising the need for better legal protection and support for what could be risky businesses.

The two Koreas have been expanding cross-border talks since their leaders met in April and May but a full-blown discussion on economic cooperation will likely wait until there is any meaningful progress in denuclearizing North Korea.

The ministry official said that sanctions that South Korea announced in 2010 in retaliation for the North’s sinking of a South Korean warship will remain in place but emphasized that there will be “flexibility” apparently hinting at enforcing them in case of people-to-people contacts.

The sanctions focus on preventing inter-Korean contacts and suspending any investment and assistance in the North except for humanitarian purposes.

Since the Moon Jae-in government took office in May last year, there have been 507 approved contacts with North Korean people and eight endorsed trips by South Koreans to the North, according to the ministry.

Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.